The Majority of People With Individual Insurance Have Terrible Coverage

Half of Americans with individual health insurance (that is, those who are not insured through their employers) have coverage that's categorically worse than what will be allowed under the reforms of the Affordable Care Act, according to a new study. New changes, which will go into effect in 2014, will help more Americans gain access to better care, covering more conditions for less out-of-pocket cost.

The new analysis, supported by the Commonwealth Fund, evaluated current individual coverage and group coverage, looking at how much people were paying for medical bills every year, and the kinds of conditions that were covered.

People in this 'tin' category did not have benefits like mental health coverage or even maternity care.

Under the new program, people will have the option of buying coverage that falls into one of four categories of cost-sharing - platinum (which covers an average of 90 percent of medical expenses), gold, silver, and bronze (which cover about 60 percent). So the authors of the study wanted to see how people's current coverage stacks up to what will be mandated in the near future.

They found that for people who have individual plans today, 51 percent had health coverage that was worse than the new bronze coverage. The authors dubbed this category "tin" coverage, and people who fell into this group paid an average of $4,127 in out-of-pocket expenses each year, but people with the most health problems paid over $27,000 every year. People in this "tin" category did not have benefits like mental health coverage or even maternity care.

People with group health insurance were better off, with 60 percent falling into either gold or platinum categories. About 80 percent of their medical expenses were covered, and they generally had preventive care and screening tests, maternity coverage, and mental health coverage. Their out-of-pocket expenses were $1,765 per year, and even people with the most health problems spent only $7,513 annually. Both of these costs are considerably less than those of people who have individual coverage.

The good news is that things will continue to change. Insurance companies can no longer deny people coverage because they have pre-existing conditions, or set rates depending on a person's health. State exchanges and small-group and individual plans will offer people much more extensive coverage and protections than we have today, according to the authors.

"This study shows that millions of Americans currently have coverage that does not accord them access to timely care and potentially leaves them exposed to catastrophic medical bills," said Sara Collins, Vice President of the Commonwealth Fund. "The provisions of the Affordable Care Act will not only extend new coverage to millions of uninsured Americans, but vastly improve the coverage of many who are insured but poorly protected by their health plans."

The study was carried out by a team at the University of Chicago and published in Health Affairs.